More Restrictions Placed on West Coast Bancorp After $12.1-Million Loss
West Coast Bancorp, battered by bad loans and foreclosed properties, said Friday that it lost $12.1 million for the year and that it is now subject to more restrictions because of its eroded financial condition.
The red ink, a loss of $1.32 a share, compares to a 1992 loss of $7 million, or 76 cents a share.
West Coast, holding company for Sunwest Bank in Tustin and Sacramento First National Bank, said the liquidation a year ago of its Heritage Thrift & Loan subsidiary accounted for much of its 30% drop in revenue, to $28.2 million from $40.2 million in 1992.
Federal regulators imposed severe restrictions on Sunwest almost two years ago, and the bank’s continuing losses now put it in a federal category that limits its growth and certain operations, said Frank E. Smith, West Coast’s chief financial officer.
Sunwest, which accounted for nearly all of last year’s loss, falls short of mandatory levels for capital--its final cushion against losses--and is now classified as “significantly undercapitalized.”
Smith said he doesn’t expect the bank’s core ratio of capital to assets, now at 3.34%, to fall this year below the 2% level that would put it in the “critically undercapitalized” category and render it subject to a federal takeover. The bank is required to maintain a 6.5% ratio.
Meantime, he said, the company will try to raise more cash for Sunwest from investors by the end of June.
The Sacramento bank meets all capital requirements, he said, even though it lost $300,000 last year.
Smith attributed about $8 million of the company’s loss to cash put in reserve for possible losses on loans, primarily loans to small- and medium-sized companies that serve Orange County’s major economically distressed industries: construction, aerospace and construction engineering.
West Coast also lost about $3 million on the sale of properties it previously had taken back in foreclosure actions. Through those sales, however, the company reduced the value of its foreclosed real estate to $4 million from $13 million, Smith said.
